chapter 1

A business that engages in cross-border economic activities

International Business (IB)

The management of uncertainty and complexity across countries

International Business Management

A firm’s theory about how to compete successfully

Strategy

A detailed formal plan to achieve business goals

Strategy as Plan

A pattern of actions and decisions over time

Strategy as Action

Combining planning and action to achieve long-term success

Strategy as Integration

A concept explaining and predicting how a firm competes

Strategy as Theory

The process of competing and operating across multiple countries

Global Strategy

Providing standardized products/services worldwide

Global Strategy (Traditional View)

The close integration of countries and people globally

Globalization

The idea that globalization is not complete but still significant

Semiglobalization

The level of a firm's involvement in international markets

Degree of Internationalization

A company that controls assets in multiple countries

Multinational Enterprise (MNE)

The advantages firms gain from operating in multiple countries

Benefits of MNE

The difficulties firms face when operating internationally

Challenges of MNE

The differences in culture, markets, and institutions across countries

Cross-Border Complexity

A framework focusing on industry competition and external forces

Industry-Based View

A framework focusing on firm-specific resources and capabilities

Resource-Based View

A framework focusing on formal and informal rules of the game

Institution-Based View

A model combining industry, resource, and institutional perspectives

Strategy Tripod

The set of activities that create value in a firm

Value Chain

The decision of which activities a firm performs internally vs externally

Boundary of the Firm

The practice of contracting out activities to external firms

Outsourcing

A performance measurement system including financial and non-financial metrics

Balanced Scorecard

How customers perceive a company’s value

Customer Perspective

Internal processes a firm must excel at

Internal Perspective

The ability to innovate and improve over time

Learning and Growth Perspective

Financial performance and profitability of a firm

Financial Perspective

A historical period (1870–1914) with high global trade and migration

First Age of Globalization

The idea that globalization increases and decreases over time

Globalization Pendulum

The argument that the world is not fully globalized

Ghemawat’s Semiglobalization Argument

Barriers that limit full global integration between countries

Market Barriers

The concept that firms often operate within regions rather than globally

Regional Strategy

The disadvantages firms face when operating outside their home country

Liability of Foreignness

The disadvantages firms face when operating outside their home region

Liability of Regional Foreignness

Strategies focused on adapting to local markets

Localization Strategy

Strategies focused on standardizing products globally

Standardization Strategy

The idea that firms must balance global efficiency and local responsiveness

Global Strategy Tradeoff

A market structure where one firm dominates the entire industry

Monopoly

A market structure with a few large firms competing

Oligopoly

A market structure with two dominant firms

Duopoly

A group of firms producing similar products or services

Industry

A model stating that industry structure determines firm strategy and performance

SCP Model

An economic approach focusing on industry structure and competition

Industrial Organization (IO) Approach

A framework analyzing five competitive forces affecting industry profitability

Five Forces Framework

Competition among firms within the same industry

Rivalry Among Competitors

The risk of new firms entering an industry

Threat of New Entrants

The power suppliers have to influence prices and terms

Bargaining Power of Suppliers

The power customers have to influence prices and demand

Bargaining Power of Buyers

The risk of alternative products replacing existing ones

Threat of Substitutes

The stronger the competitive forces, the lower the profitability of an industry

Five Forces Principle

A strategy focused on achieving the lowest cost in the industry

Cost Leadership Strategy

A strategy focused on offering unique and valuable products

Differentiation Strategy

A strategy focused on serving a specific niche or segment

Focus Strategy

Targeting a broad market with low prices and efficiency

Cost Leadership Approach

Targeting customers willing to pay more for uniqueness

Differentiation Approach

Targeting a narrow market segment with specialized offerings

Focus Approach

Producing high volume at low margins to reduce costs

Cost Leadership Model

Producing low volume at high margins with premium pricing

Differentiation Model

The challenge of maintaining uniqueness over time

Sustainability of Differentiation

A firm failing to clearly choose between cost or differentiation

Stuck in the Middle

Performing activities differently from competitors to gain advantage

Strategic Positioning

Choosing between cost advantage or differentiation advantage

Strategic Choice

A tool to evaluate industry opportunities and threats

Industry Analysis

Understanding competitors and market conditions to gain advantage

Competitive Analysis

The idea that not all industries have equal profitability

Industry Profitability Differences

Assessing external opportunities and threats in an industry

External Analysis